Publication in the scientific journal Nature: How pharmaceutical companies make profits

It is the dream of many researchers: a publication in one of the world's most renowned scientific journals. Prof. Dr. Alexander Schuhmacher, Professor of Life Science Management at THI Business School, has now succeeded in doing so. Together with a team of researchers from the University of St. Gallen and others, he has published an article in „Nature Reviews Drug Discovery“ (impact factor: 84,7). In it, he examined the global top 20 pharmaceutical companies in terms of their corporate strategy and found that their risk-based business model ("high-risk and high-reward"), while profitable, depends on a few drugs, so-called blockbusters.

Prof. Schuhmacher refers to drugs that generate more than a billion dollars in sales as blockbusters. Only the commercial success of such blockbusters enables pharmaceutical companies to finance their very cost-intensive research departments and the development of new drugs. Recent studies had suggested that this business model might no longer work and that the leading pharmaceutical companies are finding it increasingly difficult to develop such highly profitable drugs.

Schuhmacher's detailed analysis now shows: It is true that the financial risk for pharmaceutical companies is becoming greater and greater when they launch new drugs on the market, and most of them are not economically viable. But up to now, companies have always managed to compensate for their high development costs, even for drugs that are not or only moderately successful, with even higher profits from the so-called blockbusters. In the period considered by Prof. Schuhmacher, the "high-risk and high-reward" business model has thus worked.

The article was published in the current issue of Nature magazine.